Kreuz Holdings Reports 8-Times Higher Profit for First Quarter 2011 (Singapore)

Kreuz Holdings Limited, a subsea service provider for the oil and gas industry, reported that profit for the period jumped over 8-times to a record US$5.7 million for the three months ended March 31, 2011 on the back of a 292.2% increase in revenue to US$26.1 million. Sequentially, revenue grew by 27.9% from fourth quarter last year, while net profit rose by 37.1%.

The strong revenue growth was driven by an increased number of subsea service projects being performed by the Group in 1Q2011. In line with the higher activity level, cost of sales rose by 231.2% from US$5.0 million in 1QFY2010 to US$16.7 million in 1QFY2011. With the increased economies of scale and as a result of higher margin projects, gross profit jumped by 481.0% to US$9.4 million. This translated to a gross profit margin of 36.2% in 1Q2011, an increase of 11.8% points from the 24.4% in 1QFY2010.

Mr Kurush Contractor, Executive Director and CEO of Kreuz Holdings, said: “We are pleased with our excellent performance for 1QFY2011. We have witnessed substantial pick up in interests for our services from our clients in the region, as seen in our order book of approximately US$110 million. We will continue to leverage on our strong track record of operational excellence, to entrench ourselves with existing clients and win new ones.”

Profit before tax was up by 706.0% to US$7.4 million in 1QFY2011, notwithstanding higher administrative and other operating expenses, as well as finance costs.

Balance sheet remained healthy with net asset value per share increasing from 16.67 US cents to 17.80 US cents over the same period. Earnings per share also rose from 0.12 US cents in 1QFY2010 to 1.13 US cents in 1QFY2011.

Outlook

With the growing demand for energy in emerging Asia, oil and gas (O&G) production companies are stepping up their capital expenditures to enhance their production, either through development of new fields or by upgrading their existing production facilities. This underlies the long term positive trend in demand for the service of offshore service companies such as Kreuz.

Currently, the market for subsea services remains very competitive. Project wins will continue to be driven by a strong focus on details – ranging from safety record to quality of performance, innovation in project execution, meeting completion schedules and optimising costs. However, we believe that we have built strategic long term relationships with our clients based on trust and performance.” said Mr Kurush Contractor. “Our sterling reputation and established track record will also be the key to winning new customers.”

The Group recently secured subsea installation contracts worth approximately US$24.8 million, marking a strong start to the 2011 contract season. With the sound fundamentals of the oil and gas industry, as well as the healthy pipeline for subsea projects that Kreuz has tendered, the Group remains positive on its outlook going forward.

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Source: kreuz ,May 13, 2011;